UPDATE 2-S&P 500 may correct to 830-875 levels - JP Morgan

June 26 (Reuters) - The Standard & Poor's 500 index .SPX
is likely to see a correction to between 830 and 875 through
September, given its virtually uninterrupted rise since its
March lows, J.P. Morgan Securities said and urged investors to
use the correction to build positions in cyclical stocks.

This correction could be followed by a strong rally to
between 950 and 1000 by the end of 2009, JP Morgan strategists
wrote in a note dated June 25.

"A correction, even if it is two months in duration, we
believe should be used as an opportunity to build positions in
cyclicals, rather than a window to buy defensives," they said.

JP Morgan strategists upgraded U.S. industrials and
materials sectors to "overweight" from "neutral" in
anticipation of continued outperformance of cyclical stocks.

"For both, we believe visibility and earnings recovery will
not happen until later in this recovery," the strategists said.
"But... the groups have typically outperformed even as earnings
have deteriorated," they added. The S&P 500 index has risen 32
percent since its March lows and much of this move has been
powered by cyclicals -- discretionary, technology, industrials
and materials -- and financials, JP Morgan strategists said.

They see a global synchronized economic recovery, with the
recent rise in equity markets eventually leading to a
four-to-six quarters of above-trend growth sometime in 2010.

The S&P 500 index gained 19.32 points, or 2.14 percent, to
close at 920.26 Thursday. The S&P 500 is up 36 percent from a
12-year closing low hit on March 9.